TIDMORPH
RNS Number : 2418A
Open Orphan PLC
20 January 2020
20 January 2020
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
Open Orphan plc
("Open Orphan" or the "Company")
Completion of Merger with hVIVO ("Merger") and Re-Admission
Open Orphan plc (ORPH), a rapidly growing specialist
pharmaceutical services company which has a focus on orphan drugs,
is pleased to announce that admission to trading on AIM and
Euronext Growth of its existing ordinary share capital and the new
ordinary shares to be issued as consideration in connection with
the Merger, will commence at 8.00 a.m. today.
Highlights:
-- Completion of merger between Open Orphan and hVIVO creating a
European full pharma services company in a compelling strategic
combination
-- Enhanced management and Board with a strong operational track record and M&A experience
o Cathal Friel, moving to Executive Chairman with a full-time
hands-on role in the business
o Trevor Phillips and Tim Sharpington becoming CEO and COO,
respectively, of the enlarged group
o New board with the appointment of Michael Meade as an
additional non-executive director, along with Brendan Buckley and
Mark Warne as non-executive directors and Trevor Philips and Cathal
Friel as executive directors
-- Combination creates a platform of highly specialised, complementary CRO service providers
-- Combined robust pipeline of over GBP100 million at January
2020. The Group is focused on building long term contracts with
recurring revenues. Open Orphan has confirmed signed contracts of
EUR10.5m as of January 2020 which is the highest in its history
with an additional EUR4m at an advanced stage with clients under an
existing MSA. Open Orphan is successfully moving Venn away from
short-term contracts to long-term, 3-year contracts with recurring
revenues e.g. IPSEN (Nov '19) and a German Tier One pharma company
(Jan '20). hVIVO has a solid pipeline of identified and pitched for
contracts of GBP81.2m as of January 2020, which is significantly
higher than the prior two years
-- A number of joint Open Orphan and hVIVO pitches have already
been submitted to hVIVO clients with the now expanded Venn service
capability
-- Estimated operational synergies of GBP3.1m in 2020 rising to
GBP4.4m in 2021 - longer-term revenue synergy potential through
utilisation of Open Orphan's Phase II capabilities for hVIVO's
challenge study clients
-- New combined revenue model unlocks potential for substantial
revenue growth and sustainable profitability - by combining Open
Orphan's existing preclinical, phase 1 and Phase 2, regulatory and
other services along with hVivo which is an industry leading
services provider in viral challenge studies and laboratory
services creating a leading European specialist pharma services
company
-- Proposed placing to raise GBP5m - underwritten by up to
GBP2.5m by Raglan Capital - to support the Group's growth plans
Cathal Friel, Executive Chairman of Open Orphan commented:
"I am hugely excited by the combination of Open Orphan and
hVIVO. We have a fantastic team, substantial revenue potential and
the opportunity to grow quickly in the year ahead. I am personally
participating in the placing as I believe in the strategy of the
business and its ability to deliver substantial returns to
shareholders in the next 12 months."
Trevor Phillips, CEO of Open Orphan commented:
"We now have an industry leading team with the ability to
generate substantial revenue growth and profitability, delivering
the leadership's vision to create a successful European full pharma
services company. With the now complementary and wider specialist
CRO services offering, it gives us the opportunity to generate
substantially larger revenues and over the full-time course of the
customer relationship. With a robust combined pipeline, I am
confident we have the solid platform to achieve our goals."
Strategy - delivering on our pipeline and enhancing returns
through business synergies
Since the acquisition of Venn Life Sciences by Open Orphan in
June 2019, the Company has focused on transitioning Venn from short
term contracts to long term contracts with recurring revenues,
reducing its overheads and taking actions to increase
profitability. Before the merger, hVIVO had successfully refocused
its business model and completed a business turnaround with
operational efficiency measures and headcount reductions
implemented. The Merger is expected to bring further benefits as a
result of hVIVO now being able to provide the Venn offering,
preclinical, Phase I and Phase II to customers to its challenge
study customers. The combined Group will now be able to offer a
wider range of services to a broader customer base.
In addition to the Company's focus on delivering the pipeline,
it plans to supplement returns through immediate cost savings and
operational synergies and near and medium term revenue synergies.
In the short term, the combination of Open Orphan and hVIVO is
expected to result in substantial cost savings through the
elimination of subcontractor costs where they can be replaced by
new capabilities within the enlarged Group. The Group estimates
savings of up to GBP1.7m in FY20 rising to GBP2.3m in FY21.
Furthermore, the Group intends to rationalise a number of duplicate
costs resulting in GBP0.2m of cost savings in FY20 rising to
GBP0.4m in FY21.
The Group expects to deliver total synergies of GBP3.1m in 2020
rising to GBP4.4m in 2021. This combined with identified
longer-term revenue synergies by extending hVIVO relationships and
utilising Phase II capability of Open Orphan to gain contracts for
Phase II execution and lab services as existing challenge customers
migrate to field trials is anticipated to see the Group well
positioned for future growth.
Delivering the strategy is an enhanced leadership team with a
track record of operational success and creating shareholder value.
The new management of hVIVO, who joined eighteen months ago, has a
track record of successfully restructuring and re-positioning the
business for profitability having delivered significant savings of
GBP11m since 2017 at hVIVO. The Open Orphan management has a
successful history of M&A, business integration and delivering
shareholder value and have significantly rationalised the Venn
business and taken action to improve profitability. The combined
group has the relevant expertise to deliver substantial revenue
growth and profitability.
Proposed Placing
Open Orphan is proposing a placing of GBP5m to support the
enlarged Group's business plan (the Placing"). The proceeds of the
Placing will be used to fund the rapid growth and synergies
programme of the business. An improved balance sheet is expected to
allow hVIVO to convert its current strong pipeline of proposals.
The Placing is being underwritten by Cathal Friel's vehicle, Raglan
Capital, up to GBP2.5m; Raglan Capital also intends to participate
in the Placing.
It is expected that further announcements regarding the Placing
will be made in due course.
Compulsory Acquisition
Open Orphan intends shortly to exercise its rights pursuant to
the provisions of sections 974-991 of the Companies Act 2006 to
compulsorily acquire the remaining hVIVO Shares. The compulsory
acquisition will be settled on the same terms as the Merger and the
relevant hVIVO shareholders will be entitled to receive 2.47 Open
Orphan shares for every one hVIVO share. Statutory notices are
expected to be posted in the coming days to any hVivo shareholders
who have not accepted the Merger offer with further details.
S
Enquiries:
Open Orphan plc Tel: +353 1 644 0007
Cathal Friel, Executive Chairman
Trevor Phillips, Chief Executive Officer Tel: +44 (0)20 7347
5350
Arden Partners (Nominated Adviser and Joint Broker) Tel: +44
(0)20 7614 5900
John Llewellyn-Lloyd / Ruari McGirr / Benjamin Cryer
Davy (Euronext Growth Adviser and Joint Broker) Tel: +353 (0)1
679 6363
Anthony Farrell (Corporate Finance)
Camarco (Financial PR) Tel: +44 (0)20 3757 4980
Tom Huddart / Dan Sherwen
Notes to Editors on Open Orphan:
Open Orphan is a rapidly growing European full pharmaceutical
services company with a focus on orphan drug and specialist
services, comprising two commercial specialist CRO services
businesses (Venn and hVIVO) and a developing early stage orphan
drug genomics data platform business capturing valuable genetic
data from patient populations with specific diseases with
designated orphan drug status and incorporating AI tools. In June
2019, Open Orphan acquired AIM-listed Venn Life Sciences Holdings
plc in a reverse take-over and in January 2020 it completed the
Merger with hVIVO plc. Venn, as an integrated drug development
consultancy, offers CMC (chemistry, manufacturing and controls) ,
preclinical, phase I & II clinical trials design and execution
and hVIVO, as an industry leading services provider in viral
challenge studies and laboratory services, supports product
development for customers developing antivirals, vaccines and
respiratory therapeutics. The Merger with hVIVO created a European
full pharma services company broadening the Company's customer base
and with complementary specialist CRO services, widened the range
of the Company's service offerings.
IMPORTANT NOTICE
This Announcement and the information contained herein is not
for release, publication or distribution, directly or indirectly,
in whole or in part, in or into or from any jurisdiction where to
do so would constitute a violation of the relevant laws of such
jurisdiction.
This Announcement is for information purposes only and does not
constitute or form part of any offer to sell, or any solicitation
of an offer to buy, securities in the Company.
No statement in this Announcement is intended to be a profit
forecast and no statement in this Announcement should be
interpreted to mean that earnings per share of the Company for the
current or future financial years would necessarily match or exceed
the historical published earnings per share of the Company.
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END
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